welcome back to "squawk on the street," i'm dominic chu markets rallying after the senate passed the tax bill over the weekend. among the big leaders so far, macy's, kohls, disney, and 21st century fox all around 3% or so. that does it for "squawk on the street." back down the street to "squawk alley. back to you. >> it's 8:00 a.m. at facebook headquarters in menlo park, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪

good monday morning, welcome to "squawk alley," i'm carl quintanilla with john fortt, courtney reagan is with us for the hour lucky to have her on a busy market day dow up 238, s&p up almost 12 off the highs of the morning, but, obviously, on the heels of tax reform optimism. house and senate working to get something to the president's desk before the end of the year. a number of dow components hit all-time highs today home depot, mcdonald's, jpmorgan, and 3m that's just a sampling john leibovitz joins us. guys, happy monday not exactly sell on the news >> not exactly i think a lot of expectations was it was going to be a buy the rumor, sell the news i think part of it might be we didn't get the plan until late friday night, early saturday

morning, but that said, based on the rotation we saw within the market away from large, towards mid and small, away from growth towards value, it's been a pleasant surprise things have continued to move today the way that they have >> david, would you advise investors this is a smart place to get in, or are valuations a little heated right now? we're in december. this is a very bullish month for stocks historically. >> yes, seasonals are definitely on our side. valuations are a bit of a concern at the current juncture. that said, you know, i think that high valuations confirm bull markets they don't necessarily tell you anything about when they are going to end, and, frankly, when we look at the market and the economy, we see continued economic growth, steady rise in interest rates and continued profit expansion with these three variables in place, we think there's good reason for the market to continue to push higher, but we are entertaining opportunities outside the u.s. where valuations are a bit more favorable. >> you pointed out value stocks are doing well today and crowded trades are getting punished. at the same time, it's an

interesting list of tech names close to 52-week highs some of them are values, cisco, fort net, net app. what do you think is going on in tech etsy is doing pretty well, perhaps on this renewed retail optimism in the shopping season. >> yeah, it's hard to generalize about all tech, but you can generalize about value versus growth by definition, value stocks have more earnings as a portion of their value. that's why they are trading at lower multiples, so they are going to benefit more from tax cuts than the growth stocks that are trading at 30 and 40 times earnings so, we think it's a very crowded trade, as you just said. the hedge funds have been long tech, long growth, short value retail, similar way. the retail investor wants to own amazon, google, and facebook, doesn't want to own the low pe stocks that we love. >> common narrative, david, in some of the sell side, the macro strategist calls for '18 is this will usher in a new wave of

optimism that somehow forces the market to top out in the first half, first quarter of '18 do you agree >> i think there's one key piece to that argument that people are missing, which is we still don't know which year corporate tax reform is going to happen in if it happens in 2019, there's reasons to seethe market melt higher in 2018, but even if it does happen next year, for us 2018 is going to be a year of continued economic growth, profit growth, and a fed which adheres more to their forecasts as opposed to the expectations of the market. for us 2019 might be more of the pain point, assuming tax reform happens sooner than later, whereby you have a fed getting nervous about inflation. >> you would argue the timing of corporate is the most important part of this conference? >> yes, i think that the timing of the corporate tax reform, you also have to pay attention with what happens with individual and the sunsets, but from a market standpoint you need to watch the 2018 versus 2019 issue

>> charles, how much should we be thinking about the overall global picture in this because so many of the companies that we're looking at, you now some of the value plays that you mention are benefiting somewhat from tail winds currencywise and we're talking a lot about how domestic policy is going to affect them, but any sort of down draft in europe or asia is going to have a significant affect as you look forward to 2018, how stable or strong do those look globally >> they look pretty good that's one of the things we've got right now, we've got global growth, growth almost everywhere you look, so it is -- this is one situation where the international companies, the conglomerates that have more of their operations outside the u.s. are going to get less benefit from the tax boost, but they are getting more benefit from the more growth outside the u.s. so, i do think everybody's winning here right now, but if you had to ask me, the people that are benefiting the most right now are the u.s.-based

high tax paying companies, and those are overwhelmingly the value stocks and financials, which are trading at 13, 14 times earnings >> so it still looks like, charles, we don't have all the details of what the final tax reform would be. of course, we talked about the timing a little bit earlier. there are fundamental differences between what we're seeing right now with the house and the senate bills what are you most concerned about or what do you think the market wants to see most of some of those differences, whether it's that amt on the corporate side, or the differences in the brackets >> yeah, i don't want to be disagreeable on a monday morning meeting, but i don't really think there are big differences. i think they are very, very close. the one big issue that david pointed out is the one-year delay. i, frankly, don't think that's going to happen. i think congress is going to win there and figure out a way to get that passed. it wouldn't be great to have this delayed for a year. wouldn't be the end of the world, but wouldn't be great i think they are going to make

it 2018. >> well, we're going to watch the hill, obviously, for the next couple of weeks very carefully. charles, david, thank you guys see you soon >> thanks for having me. we're also watching the latest in broadcom's pursuit of qualcomm qualcomm says, "these nominees are inherently conflicted, given broadcom's desire to acquire qualcomm." qualcomm rejected broadcom's takeover bid last month. taking a look at the stock, i think it's a little bit curious what investors are making of this, because everybody seems to think if they are going to get qualcomm, they are going to have to bid more, and since the bid came out the stock has traded down around $64 at this hour >> just shy of that number we're going to watch the slate

obviously, big discussion with david and jim earlier this morning. when we return, the amazon health care threat and how successful aetna/cvs might spell trouble for jeff bezos and company. and we'll talk to the ceo of groupon. later on, walter isaacson weighs in on tax reform and a new messenger app from facebook designed specifically for kids when "squawk alley" comes back

cvs agreeing to buy aetna for close to $70 billion in a move some say is designed to better compete with the likes of amazon if and when they decide to jump into this space. both ceos appearing on "squawk box" earlier to talk about the tie-up here's cvs's health ceo larry merlo on the value to potential customers. >> we have a tremendous opportunity to create value for consumers and payers, and, you know, when we talk about payers, that does include the federal government so we'll look forward to sitting down with the regulators, talking about how this comes to life in a meaningful way to see the benefits the consumers and payers can see from this transaction. >> for more on the impact this deal is likely to have on

amazon, as well as the health care industry, we're joined by lead internet analyst mark mahaney and michael baker. welcome, good morning to both of you. mark, i want to start with you so, when you look at deals like this, and the space and the opportunity technology has for disruption, perhaps for consumers to own their data and interact more directly with doctors. is this likely to put pressure one way or the other on the likes of amazon to jump in sooner or later? >> i don't think so. look, i think amazon getting into retail pharmaceuticals, i think, is almost a given i'd be surprised if amazon wasn't in the space in five to ten years. i think there are two bigger fish right now for amazon. first is tapping into the grocery market and working out synergies with whole foods, and second is their business-to-business opportunity within pharmaceuticals, business supplies, medical devices. i think that's the first or

second area of priorities for amazon but if you think about the amount of spend that consumers have in retail pharmaceuticals, i think for amazon not to go into that would be odd in the grand scope, grand history of amazon expect them in that space, but not immediately. >> and michael, when you look at the likes of apple with the apple watch pushing further into, say, this heart health city that we were talking about last week, accessory makers getting more fda clearance for devices to connect to that, when you have bigger players in the space like a cvs, aetna, is that likely to accelerate innovation and investment >> yeah, i think one of the responses that we're seeing here in health care is health care's been late to engage the consumer, and that's clearly some of the opportunity that's going to be had by a combination like this to provide, you know, lower-cost options so it's not always about, you know, amazon even unitedhealth is getting more into the provider and

offering lower-cost solutions and different ways to engage with the system. >> so, michael, i have a question when it comes to consumers and lower cost options. i think i'm a pretty informed consumer, but i don't always know what it costs when looking at different options for either a test or procedure or medications. does a deal like this necessarily mean we're going to have more pricing transparency as a consumer so i can make better choices about health care >> no, that remains a big issue. transparency continues to be a big issue in health care we're starting to see ways to make it kind of more convenient, so when you go and visit your doctor, your doctor will be able to see what the relative costs are to a medication, and instead of waiting for a prior authorization, you may be able to get it there. so when i talk about kind of cost differential, it's really relative to the high cost hospital, and, certainly, you're seeing the rise of more urgent care centers and, obviously, cvs could position to not only address that, but also make it

more convenient so you pick up your script there, as well >> mark, you were talking about what you think amazon is likely to do in five years or so. that's an eternity in amazon time, but we were a decade plus ago google was pushing on health records, a space silicon valley was going to make big waves in what's your take on what's taken so long, perhaps what's impeded technology from having an impact in health its long wanted to >> that's a multibillion dollar question, john i'm not sure the answer to it. i know there's a lot of regulatory issues, but other companies have been able to work through that, and it's -- maybe it's just been a matter of priorities and trying to pick off the lower hanging fruit. when i think about amazon and retail pharmaceuticals, it's a large market about 10% of retail pharmaceuticals is filled by general mass merchandise retailers, walmarts, costcos, safeways, krogers. and, by the way, i think this is

one of the most interesting synergies, interesting new synergies for amazon/whole foods. whole foods doesn't do anything with pharmaceuticals for a lot of reasons, but i think it makes eminent sense. my guess is that was probably one of the rationales behind the deal, though it hasn't been discussed to date. >> no doubt. they are going to take a look at probably just about everything, knowing their ambitions. thanks to both of you, mark and michael. >> thank you >> thank you still to come this morning, shares of groupon have taken off this year, surging more than 70s% we'll talk to rich williams about e-commerce, tax reform, and more dow is up 216. "squawk alley" is back in a moment the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible.

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our next guest joining us here at post 9 and a cnbc exclusive is groupon's ceo rich williams thanks so much for being here. we really appreciate it. about 149 million customers spending $120 per year on your app or website this is the big season for you what's going on so far here in the holiday season >> as you said, this is the super bowl of sorts for e-commerce, retail in general, and by a long shot my favorite time of year it's just intense. what we've seen is something we've seen all year, just a healthy consumer where you have engaged audiences working, i think, increasingly in realtime. i think that's the biggest thing we've seen change over the last little stretch, and for groupon, you know, the four-day crazy period from black friday to cyber monday, we saw north of 80% of our business transacting on a mobile device, which is a really significant shift in a trend we've seen longer term from web to mobile, but a big

change in a relatively short period of time, so it's that engaged consumer, increasingly a realtime engaged consumer. >> on your earnings call you said friction is the enemy in years past groupon could be clunky with printing out the voucher, bringing it, so how far have you come in that progress, just recently in some of the changes you've made? >> i'd say we're really early in the process and some of that is just us, we're hard on ourselves, we're our biggest critics, but if i turn back the clock even a year, you have a very different groupon experience now we have almost 25,000 bookable deals on the site, things you can just set an appointment to, whether it's a hair salon, nail salon, et cetera, so it's becoming easier and easier that went from really a handful of things a year ago to now over 25,000 we talked a little bit ago about our groupon plus product, which is that card-linked experience, which is just incredible you walk in, swipe your card,

get cash back. that's gone from really zero to thousands of offers in 23 cities around the country and now, you know, well north of a million enrolled folks with their credit cards and the programs so it's starting to become a much bigger part of the groupon experience just be easy, fast, and fluid, and i think more importantly better than the original experience >> i have to imagine as far as the tax bill goes, if small business is able to keep more of their income, marketing budget goes up. that helps you >> it could. you know, i think, look, anything that puts more money in the pockets of small businesses for them to invest in growth we think is a good thing. you know, you've had small businesses, one of the biggest challenges is access to capital and access to reach, and we've provided historically a mix of both of those at groupon, where we've given them a cash flow opportunity through our product and also access to that 49 million customers that you mentioned. and having that, you know, be able to build on top of that, if

they are able to save more money on the tax side, is generally, i think, good for everybody, not just groupon >> i remember ten years ago roughly local was the big thing in internet. that's when groupon was getting hot, that's when yelp was, as well right now both of you guys have market caps in the $3 billion to $4 billion range not huge what happened? did facebook and google rush into this with advertising and have a bigger impact than people thought, or is there another leg that you think is coming >> i think, look, local was early, it's exciting because it's a really big marketspace, you know, we would measure our addressable market in the trillions of dollars just as i'm sure yelp and others and whether that's facebook looking at the space with big opportunity, so there's, i think that went in early, just the size of the market and the acceleration of a handful of these businesses, but the reality is, it's a very big marketspace. it's not like an established space like retail that's been around for decades and decades and decades.

this is something that's transitioning just really now and changing user behavior at a scale that's powerful. >> did mobile and location turn the ad market into the local ad market at the same time? now google and facebook can see where people are, so they can target that way. >> look, local is location, it's where you are. it's not what you -- neighborhoods are a big part of that, cities are a big part of that, but it's really about you and where the user is. that's where we see as we've invested in mobile a big advantage for anyone who has real scale there for us, we at well north of 150 million downloads of our app, as i mentioned north of 80% of our business was on that device, so we're just really entering the stage where local is starting to come of age, mobile and location are a huge piece of that >> what percentage of consumers do you think when asked by their phone can we access your location say yes >> a significant percentage of them >> really? >> yes >> you can understand the reticence, right >> of course, of course.

i think the hurdle is high, and that hurdle is about value are you going to give that user a reason to hit that allow button and, you know, i think a lot of folks took that for granted because it was easy as an app developer to throw that up, but like everything else, the consumer is savvy, people are very, very smart and increasingly valuing their data at a higher level, which is good for everybody. because it raises the bar for us as retailers >> thanks so much for joining us a couple analysts say that could be a game changer. thank you so much. make sure to check back in with us >> perfect straight ahead, facebook today unveiling a messenger app specifically designed for kids too young to use facebook, but some are none too pleased. plus, the dow surging this morning on tax reform optimism, but off session highs. we're going to hear what walter isaacson has to say about that when "squawk alley" returns. you can't predict the market.

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hi there, i'm contessa brewer here's your cnbc news update at this hour. a video allegedly shows the slain body of the country's former leader. officials from various sides have confirmed the video

they say he was trying to flee to saudi arabia. the united states and south korea are launching large scale joint aerial drills. the exercises come a week after north korea said it had tested its most advanced ballistic missile. those exercises run until friday, and they've been condemned by pyongyang as provocative. this year's flu season has gotten off to a fast start four states have widespread flu activity, according to the cdc last year there were none at this time and the dominant strain this year is more severe. the aclu of southern california honored colin kaepernick last night. the crowd, in fact, gave him a standing ovation after he surprised them by showing up at the annual bill of rights dinner and spoke briefly before a supportive crowd that's our cnbc news update at this hour. let's get back to "squawk alley" now and carl >> contessa, thank you very much let's get to dominic chu and the european close dom? >> carl, european stocks

rallying to begin the week on optimism surrounding that push for tax reform in the united states this after coming off their third negative week in the past four a big day, though, for the german dax you can see there up by about 1.5% the index is experiencing its best one-day performance since april as it tries to recover november losses. the dax is now up 13% so far year to date european banks are among the biggest gainers, including commerce bank, barclays, and deutsche bank. fiat-chrysler rising in italian trading, renault, bmw, daimler also in the green. moving to the plane side of things, airbus saying it still expects to deliver a record number of aircraft to customers this year. a different story for dialogue semiconductor. the apple supplier tumbling of a it said the iphone maker could be working on its own power management chips dialogue added it saw no impact

on its business next year. finally, the pound pulling back from its highs of the session after the uk and eu both fail to strike an agreement on brexit talks during a meeting in brussels now, moments ago at a joint news conference with uk prime minister theresa may, european commission president junker said despite progress, it was not possible to reach a complete deal today the uk prime minister said discussions will resume before the end of the week. she expressed confidence the outcome will be positive john back over to you guys. >> all right, thank you, dom meanwhile, major rally under way. the dow is up more than 1% the nasdaq remains in the red, though let's get to bob pisani on the floor. bob? >> hello, john we are seeing some major rotation going on in the market. i know it looks like everything is up, the major indexes are, but you'll see some changes. let me show you the big indexes right now. there's the transports look at that, just taking off

here the russell 2000 is also on the upside, and notice the s&p 500 is lagging here. remember the transports and the russell small caps have lagged the s&p 500 the entire year, but things are changing very fast. ever since about last tuesday, this started when the tax cuts started getting very, very real. things took off. look, there's the transportation, that's the white line this is the last week and the bottom line, the s&p 500 look at that, transports are up almost 9%, s&p is up maybe 2% or so you can see the outperformance, so things are changing here as underperforming groups start doing better the other major thing you can notice is value versus growth. this is sometimes nebulous to define, but this is the vanguard growth versus value, you can buy these in etfs now. this is last week, the vanguard value on the top there, and that's growth on the bottom. you can see dramatic outperformance up about 4% on the value and growth is down slightly in the last week. what does this mean, these words

value versus growth? in the context we're talking about, value means mostly bank stocks and that's why the bank stocks have been doing so well recently and again today, jpmorgan, bank of america, means some consumer names like proctor and gamble, telecom like verizon and many oil names, not always, but does, exxon would be considered a value spot right now and that's also spot what is growth growth is mostly technology names, so your fang stocks, apples, amazons, facebook, netflix, googles all down today, but it could also include financial technology names, so mastercard is starting to roll over a bit, as well. visa is also starting to show topeeness. if you look at the tech exchange funds, smh has been weak for several days, carl, and etfs associated with technology like robotics etfs, social media etfs, cybersecurity, that's hack on the bottom there, all weak

today. this is quite noticeable, this rotation we'll talk more about it in the next few hours carl, back to you. >> thank you very much, bob pisani as we said, optimism helping drive today's rally. the senate's plan could bolster shares of apple, microsoft, and alphabet for more, ceo, former managing editor of "time" magazine, walter isaacson. great to see you, good morning >> good morning, carl, great to see you. >> discussion about what this is doing for equities, the degree it will impact job growth and competitiveness. where are you on what this bill finally said >> well, obviously, it's great for corporations and you're seeing that in the equity market the question will be twofold for me one, does it really help a working class that's stagnated in their wages, and you can argue either way, may be huge business and corporate growth will help boost the middle class and working class. secondly, does it add to our

long-term deficit. there's a lot of things sunsetting, expiring, so there's some gimmicks played with that, some estimates it adds a trillion dollars to the deficit. that could be a problem, as well it's interesting that donald trump could have played it either way he could have gone very populist, done a big tax cut for the working class and, you know, raised corporate taxes even or kept corporate taxes the way they were. instead he opted to go for the corporate tax cut as the core of something like this. so we'll see how it plays politically. i would think it would be useful, and i thought maybe it should have been done before to have an infrastructure bill, as well, because then you can really put people back to work if you decide that everything from our air traffic control to our highways, and that would do something that would help bring the parties together a little bit better than this bill, which has one of its major downsides,

that it's a party line vote. >> right we'll wait to see if he tries to tackle that after this, which he has suggested would be one of the things that might be next. to what degree will you be watching, walter, for public displays by companies of efforts to higher or raise wages or invest in capital equipment here and attribute it directly to this bill? >> i think we have to avoid being swayed by anecdotal things, i.e. press conferences of companies that say we're going to add 5,000 or 50,000, 500 new jobs i think you really have to be data driven, look at the numbers, see does it help wage growth i mean, wage growth is stagnated, but at themoment with unemployment low, with a big stimulus like this happening, we should see wage growth, including at the lower income, at the minimum wage level, have it be done naturally. i will try to ignore those press

conferences and look at the numbers. >> do you think this is the kind of two step? we had tom steyer on i think in the last hour, the hedge fund billionaire who's very anti-trump, by the way, saying that this is the first step in really shrinking government and cutting services once the revenues aren't there anymore. does this smell like that to you? >> oh, absolutely, and it's intentional, and you can have a philosophy either way, that government should be shrunk radically, or that we as a nation should be building more infrastructure and for that matter helping people with their health care. those are the two great philosophies in america, and this one is directly aimed at cutting government spending at all levels i'm here in chicago, illinois, at the moment, and places like illinois, new york, california, in which there are, you know, higher sales income taxes to pay

for infrastructure those states are going to get hammered in this bill because of the reduction and the deductibility of state and local. so not only does it cut federal spending and federal spending on things like research and student loans and, you know, education, but also state and local spending >> walter, the other topic today involves facebook unveiling this messaging app designed for kids. it's called messenger kids the app allows kids under 13 to send messages, videos, photos, and stickers to other children with permission. facebook said it worked with hundreds of parents and child advocate groups when developing the app. given the pressure they've been under, alter, for how they treat data, is this politically tone deaf or not? >> no. i think it's good they are not going to gather the data of the people under 13. i think mark zuckerberg has started to reflect a lot on what he's built, and this is part of a larger, i hope, trend in which

we'll have a safer and more authenticated internet that people can choose to go to this is just for kids 13 and under, but i do think that whether it's twitter, facebook, google, or whatever, you should have more control and you should have a right to authenticate the people you're dealing with, and this dangerous internet that we have now with so much anonymity and scams and hacking and, you know, the type of things that went on in the political process, that's fine we need a wild, wild anonymous internet for those that want it, but we also need a more authenticated, safer internet for people like me or our kids and grandkids who might want it. >> even though it's authenticated, you have to get parental permission and there's oversight from parents i just have a hard time believing this is a good thing for kids why do you think kids need a facebook messaging app if they are under 13

why does a 7 year old need this? >> oh, i think that most media consumed by kids under 13 tends to be passive. certainly, when i was growing up, even when you were growing up, it tended to be just sitting in front of a tv now on the internet it's somewhat passive if you don't have the interactive tool. i think it's a very good thing for 6 year olds, 8 year olds, 10 year olds to be able to be more interactive and network with people, to be more communicative, to express themselves rather than just passively consume content. >> yeah. walter, i can see a couple different sides to this. i'm all for my boys, who are -- one's almost 7, one is 9, playing minecraft because it's interactive, but i don't want them communicating with other people digitally yet, because they are just learning to communicate with people in real life teaching them the handshake, looking people in the eye. i don't want them figuring out

digital protocols just yet >> maybe you're right and you're a parent and you have that right under this new facebook thing. i agree, but i do think to be very good in, you know, when they grow up, they are going to have to know how to communicate face to face, and also communicate digitally. this gives you a lot of control over that, and i get where you're coming from, but in some ways i would rather have a safe place for my kids to learn how to communicate digitally >> yeah, there's a difference, i think, probably between a messenger app, right, and having -- giving them access to newsfeed for kids. that would be maybe a little -- >> that's what -- we never had this sort of training wheels, so to speak i thought you were going to say the bad thing is for, you know, i'm a parent, too. i think maybe we hover too much, always what are you on, you know, controlling what my daughter got to see on the

internet and do. i think a lot of 12 and 13 year olds are going to say, hey, i don't want my parents knowing everybody i'm communicating with, but that's the joy of turning 15 and 16, you can start to spread your wings >> walter, i loved your piece about why you left washington and went back to new orleans of course, don't forget walter's most recent book "leonardo da vinci," number one new york times best seller. talk to you soon, thanks >> thank you very much >> thanks for joining us as always as we head to the break, keeping an eye on the markets with today's triple-digit rally leading the dow. jpmorgan, disney, boeing, lots of retail highs. "squawk alley" back after this ♪

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i'm scott walker coming up today on the "halftime report" at the top of the hour, great rotation we'll debate why tech continues to roll over and why the best trade of 2017 is dead or just on hold plus, has blue apron finally bottomed that stock is up huge today after one analyst makes a bold call is now finally your opportunity to get in? and is sports betting about to be legalized outside of las vegas? we will have the very latest as the supreme court hears a landmark case. as i said, 15 minutes away, top of the hour. courtney, see you in just a bit. >> thank you very much, scott,

we'll be watching. very interesting on the sports case, too. cvs agreeing to buy aetna in a move designed to create one-stop shopping for basic health care needs, but will it work bertha coombs is at the nasdaq to get us started. >> a lot of questions, indeed. cvs is a big pharmacy, now analysts are asking by rolling up aetna, what's going to be the real driver of this combined firm will it be a pharmacy with health benefits on the side, or a benefits firm with retail on the side in a cnbc exclusive this morning on "squawk box," cvs ceo larry merlo and aetna's chief say they are going to leverage the 9700 cvs stores to create a new kind of hybrid, one-stop shopping for simple medical care, prescriptions, and health coaching, making it simpler and cheaper for consumers. >> it's really the perfect time to bring these two companies together to create a new health

care platform that can be easier to use and less expensive for consumers. >> we can make the insurance the back room of the operation we can waive prior authorizations and co-pays as people use the system in a way that's more effective. >> they say this will be great particularly for medicare patients, who are also confused about how their benefits work, but to finance this $369 billion deal, cvs is borrowing $45 billion, promising investors it will be able to pay that down and bring it to more comfortable levels within the next few years. still s&p this morning putting cvs on credit watch negative, saying that the leverage will weaken cvs's financial risk profile and they believe there are risks to execution given the size of the deal nonetheless, carl, they did maintain the investment grade rating, and that's going to be important when their bankers go out to try to sell this debt to finance this deal. >> your twitter feed has been fire today, bertha, as people try to learn more about this

thank you so much, bertha coombs record setting rallies under way. obviously, the dow is off session highs, up 2 # 2. let's get to rick santelli and get the santelli exchange. hey, rick. >> good morning and thanks carl. i'd like to welcome my guest, david, thanks for taking the time >> good to be here >> you know, i think even when there's erroneous news stories that move the market or ultimately the vote that the senate had that passed their portion as it sits of tax policy, the markets seem to be chugging ahead through it all. what did you learn from the way the market acted friday and the way it's trading today >> i think friday's activity is just a perfect example of trading politics, trading headlines, and having a knee-jerk reaction oh, they've stalled on the vote, but i think today is probably the more, let's say, realistic or more directional play we're getting this tax bill

done, and i think that the markets are responding the way they are going to continue to respond, at least for a little while, and friday to me is kind of a blip on the screen, a reaction to a headline >> got ya. now, with regard to 2018, there's so many questions. we know that our fed, for example, is going to be not buying all of its runoff, even though some of it will still be purchased, but there's a whole notion and a special preoccupation these days with t bills, and i understand we have a looming debt issue most likely to be resolved but seems that issuance in 2018 may include post money market reform, more short-term instruments your thoughts? >> well, i think you are going to see much more short-term issuance this tax bill aside in whatever it's going to do to the deficit aside, the deficit was going to rise in 2018 and '19 and '20 and for the next ten years, and now with this bill it's probably going to get even higher, so

there's certainly going to be an increase in overall issuance, and they've told us treasury wants to keep the average maturity where it is now, roughly 71 months. i don't think they'll be able to do that, by the way. i don't think they'll be able to sustain but you've got a combination of more short-term issuance there are going to be more bills and twos and threes and the whole litany, and the fed probably hiking, and it seems to me that this fed wants to be, you know, somewhat more aggressive than they have been in the last, you know, say year or certainly one or two years, so i think that's going to create a risk of a significantly flatter yield curve. >> now you nailed it we only have half a minute left. you know, i've had many debates with traders about the real significance of the flattening curve considering how many securities all the central banks open, but in your final thought it certainly seems though the notion of buying bills or putting more out in issuance really fits the flattening curve psychology finish up with that thought, sir? >> you know, i think we need to

look at the yield curve and say is it predicting a recession i don't think it's predicting recession, not yet but you've got the issuance side and a fed adhering to at least its view of the phillips curve, and so you've got the supply considerations and the fed and low inflation so, yes, at the -- not the end of next year but certainly throughout the course of the year i think the curve is going to get very, very flat indeed if you get fed funds for 2%, 2.25%, i think that we're talking about a yield curve 2s, 10s, 25 to 30 basis points. >> wow, awful close to an inversion possibility. thank you so much, david jon fortt, back to you. >> as we head to break, the tech-heavy nasdaq still heavy on the day. paypal and adobe and nvidia each down more than 4%. "squawk alley" is back after this

cnbc caught up with some big names in hollywood in silicon valley last night at the breakthrough prize awards in mountianview, california, where harassment was, of course, a major topic of conversation. here's what a few of them told us >> while i recognize there's problems all over, i think that the best thing that we can actually do for change is try to actually be a leader in implementing that change. >> i'm very happy that this is

happening now so that women don't have to go through the unnecessary anguish and pain that's been going on for decades. >> well, i mean, i work and live in -- in los angeles, but it's not the only industry that it's happening to, and it's really unfortunate. i mean, i'm -- it's really unfortunate. i wouldn't know how to add to the discussion >> time will add to the discussion, i think, fair enough, and we've talked about the impact on immediate crashing journalism, hollywood, politics and finance, who knows there hasn't been the high-profile cases that we've seen in other industries. >> not yet, but i can't imagine that it's not going to come out over time, and in fact i hope it changes all industries i think we all do. i'm happy we're all talking about it now as uncomfortable as it can be. i think it's good to bring awareness to the issue as arianna huffington was saying there. >> as crazy as it may sound. maybe tech has something

product-wise, ways to anonymously report you talk about uses for block chain and the ledger allow people to report incidents that concern them anonymously and be alerted when other people report on the same person. i know, give power into the hands of the people being harassed here. get honest, silicon valley. >> "squawk alley" will be back in a minute. dow is up 223.

they came out of nowhere, sir! how many of 'em? we don't know. dozens. all right! let's teach these freaks some manners! good luck out there, captain! thanks! but i don't need luck, i have skills... i don't have my keys. (on intercom) all hands. we are looking for the captain's keys again. they are on a silver carabiner. oh, this is bad. as long as people misplace their keys, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.

major indices up, obviously not as high as they were earlier today. tow is up 223, but what's interesting in the price action is the number of issues, at least on the s&p, that are up say more than 4%. >> yeah. >> at least 30 names on the s&p, up more than 4%, and from all kinds of industries, media, retail, among them. >> yeah. >> meanwhile, in the upside down, right, there are a number of tech stocks that are just having a horrible day. vm wear is down 7% strong earnings last week and amd down 5.5 what's going on there? >> the tax reform, just not getting the benefits of what the other sectors are getting there, a rotational play? >> i have no idea. it's weird. >> bitcoin is the other one to watch, of course, made the cover of "barron's" over the weekend

hit 11,8 and reports that futures may begin as early as next week. >> back on the 12th of november, less than a month ago, it was at 5,868 so just about doubled since then. >> wow, unbelievable action. >> let's get back to the judge, headquarters and "the half." >> and welcome to "the halftime report." i'm scott wapner our top trade this hour, rally and rotation stocks surging led by the banks, but it's what is falling that continues to be a big story for your money today tech is down again raising some serious questions now about whether that sector is firmly out of favor with us for the hour today, joe terranova, josh brown, jim lebenthal and kevin o'leary is back with us today stocks surging higher following the tax vote however, josh, it's the rotation